The logistics sector will grow to 8-10 pcs in the medium term; stable outlook: ICRA

New Delhi, October 9 () The national logistics sector will grow to 8-10 percent in the medium term and the outlook will remain largely stable, the credit rating agency ICRA said Wednesday.

The key drivers for increased demand would be the holiday season, as well as the anticipated recovery of infrastructure spending after the monsoon and the improvement in the accounts receivable cycle of contractors, he said in a statement.

ICRA Research has predicted that the national logistics sector will grow to 8-10% in the medium term and that the outlook will remain largely stable, he said.

The consequent boost in demand will lead to higher cargo volumes in the second half of fiscal year 2020 despite the weak macroeconomic scenario, he added.

ICRA vice president of ratings, Shamsher Dewan, said: We expect the sector to continue to outperform GDP growth in the medium term, which, apart from the demand side factors, would also be backed by the positive side of the offer, such as the appearance of integrated logistics actors, investments in infrastructure development: warehouses and intermodal transport centers and; The increase in capacity is carried out by large logistics players.

The capital expenditure of the industry towards increasing capacity (fleet, storage, cold storage, terminals, etc.) and investments in technology to improve the supply of services is estimated at Rs. 9-11 billion annually (which translates into 2-3 percent of operating income) the aggregate statement.

The credit metrics of the ICRA logistics company sample are expected to remain comfortable, he said.

On the other hand, however, the ICRA analysis of a sample of 12 large logistics players in Q1 FY2020 has indicated a 7% deceleration compared to 11% in Q4 FY2019 and 10% in Q1 FY2019. Dewan added: ICRA expects the Indian logistics industry to continue to evolve/be molded in the medium term as reflected in current trends. This includes trends such as the shift towards organized players after the implementation of the GST and E-way bill, focus on multiple modal offers, increased interest from private capital and foreign actors in space, emergence of logistical requirements of e-commerce, focus on storage and cold chain services, and greater adoption of technology. NAM ABM